A Chinese delegation, including military officials, will visit Thailand next Wednesday for a new round of negotiations in a bid to resolve a long overdue submarine purchase deal.
The 13-member delegation includes Chinese military officials and representatives of the makers of an S26T Yuan-class submarine that China contracted to supply to the Royal Thai Navy (RTN) under a 2017 procurement agreement, a navy source said.
Defence Minister Sutin Klungsang said on Wednesday there are only two options left to discuss during the negotiations with the delegation.
He said one is to cancel the submarine deal and replace it with a frigate plus a compensation deal.
The other option is China's proposal to substitute the initially required German-made submarine engine with a Chinese-made engine and ask for a better compensation deal.
Mr Sutin said that maintaining good Thai-Chinese relations will also play a role in how the negotiations eventuate.
Either way, the final choice will serve Thailand's interests well, he said, adding he couldn't be sure whether a final decision will be reached at next week's meeting.
The original agreement for the submarine stipulated a German-made diesel engine but the plan needed revision after Germany refused to sell the engine to China as it is designated as a military/defence item.
China Shipbuilding & Offshore International Co (CSOC), the contracted submarine maker, earlier offered to fit Chinese engines on the submarines.
The RTN initially rejected this offer but later agreed to the change and wanted the submarine procurement to continue.
Mr Sutin has assigned Gen Somsak Roongsita, his adviser and chair of the RTN's submarine procurement review committee, to represent him at the meeting with the Chinese delegates, said the navy source.
Some representatives of the Ministry of Commerce will also attend the meeting to discuss the possibility of incorporating the Thai government's offset policy into the submarine deal, the source said.
Under the policy, the government now requires a reciprocal trade benefit to be a part of any new military hardware procurement deals.
The source said if the government agrees to allow the Chinese-made engine on the first submarine, this could result in the RTN's plan to purchase two other new submarines from China to be approved as well.
The RTN initially sought 36 billion baht to fund its plan to purchase all three new submarines from the Chinese, but it could only secure the first deal for one such submarine in 2017, which was supposed to be delivered last year.